Skeptics like to say crypto has no real use cases. But what if it solves a decades-old problem that traditional securities markets still haven’t fixed—how to directly, efficiently, and trustlessly own and trade assets?

Today’s securities transactions are deceptively complex. A trade that should involve just a buyer and a seller instead passes through a maze of intermediaries—brokers, dealers, exchanges, market makers, clearinghouses, custodians, and transfer agents—each extracting value and introducing friction.

This elaborate system isn’t the product of natural market evolution. It developed out of necessity during the 1960s “paperwork crisis,” when a boom in trading volume overwhelmed Wall Street’s manual systems.

Back then, trading meant physically exchanging paper certificates. As volume surged, back-offices buckled under the burden, prompting the New York Stock Exchange to shorten trading hours and close one day a week just to process trades.

Brokerages collapsed. Client dividends went unpaid. Securities were lost and misplaced. Regulators intervened, and Congress responded by creating a highly intermediated national market system that immobilized paper stock certificates and consolidated ownership under central depositories.

It worked—for the 20th century. But those choices came at the cost of entrenched intermediaries, reduced transparency, systemic concentration, and cascading complexity. And core problems such as information asymmetries, conflicts of interest, and counterparty risk persist despite these layers of regulation and oversight.

Enter blockchain.

With crypto, we can trade peer-to-peer, settle instantly, verify transactions transparently—and do so without relying on rent-seeking intermediaries. Blockchain-based trading compresses custody, execution, clearing, and settlement into a single operation. Instead of waiting days to confirm ownership via a broker and central depository, trades settle atomically—automatically and irreversibly—in seconds.

Even centralized crypto exchanges dramatically simplify the user experience and reduce operational friction compared with traditional systems. They offer real-time settlement, 24/7 access, direct market participation, and on-chain verifiability. They are what online brokerages might have been if blockchains had existed before paper stock certificates.

But this isn’t just about crypto-native assets. The bigger opportunity is to reimagine how we trade all assets—stocks, bonds, funds—in a system that replaces institutional trust with cryptographic and algorithmic trust. Crypto points to a future in which capital markets aren’t only faster and fairer, but also more transparent, inclusive, and resilient.

Getting there, however, requires a regulatory reset. Congress is considering landmark legislation—such as the Financial Innovation and Technology for the 21st Century Act and the Lummis-Gillibrand Responsible Financial Innovation Act—that could set the foundation. But to be effective, any new framework must start from first principles: What risks does the traditional system try to address, and how does blockchain eliminate or mitigate them?

Consider counterparty risk. In traditional markets, the lag between execution and settlement requires a central clearinghouse to guarantee trades. That function becomes obsolete in a blockchain-based system where trades settle instantly.

Or take market manipulation. In legacy markets, enforcement depends on after-the-fact surveillance and audits. Blockchain offers real-time transparency and immutable audit trails, enabling more proactive oversight.

This isn’t to say crypto solves all problems. Smart contracts can be buggy. Self-custody introduces user error. Centralized exchanges can pose new conflicts of interest and custody risks without the right guardrails.

But these aren’t insurmountable. They are the kinds of risks smart regulation can and should address. What we must avoid is importing legacy frameworks wholesale into crypto, reinforcing outdated models instead of building better ones.

Centralized crypto exchanges in particular need thoughtful oversight. They remain the primary gateway between fiat and digital assets and are where most trading volume occurs. They should be regulated—just not as if they are broker-dealers from the 1970s.

Instead, a bespoke framework should recognize their unique structure: vertically integrated platforms that custody, match, and settle trades in one place, subject to clear rules on asset segregation, capital requirements, market conduct, and operational resilience. Regulation shouldn’t stifle the efficiency gains these platforms offer.

The policy debate eventually must extend to decentralized exchanges and peer-to-peer trading. These systems operate entirely through smart contracts and eliminate intermediaries altogether. They raise new challenges, such as code-based vulnerabilities and regulatory visibility, but most fully represent blockchain’s promise. When designed well, they offer a glimpse of financial markets with lower costs, fewer barriers, and greater transparency.

Crypto market structure is about much more than crypto. It’s about the architecture of tomorrow’s capital markets. Traditional securities will migrate on-chain over time. Tokenized equities and bonds will trade alongside stablecoins and digital commodities. The question is how—and under what rules.

Congress has a once-in-a-generation opportunity to build that future the right way. That means rejecting the false choice between letting crypto run wild or jamming it into ill-fitting regulatory boxes. It means asking: What if we had to build capital markets from scratch, knowing what we know now? What if we didn’t have to rely on a decades-old system designed for paper?

Blockchain gives us a second chance to answer those questions. Let’s not squander it.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Tuongvy Le is a former senior SEC attorney who has served in legal and policy leadership roles across the crypto industry.